Correlation Between Investec Emerging and Northern International
Can any of the company-specific risk be diversified away by investing in both Investec Emerging and Northern International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Investec Emerging and Northern International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and Northern International Equity, you can compare the effects of market volatilities on Investec Emerging and Northern International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Investec Emerging with a short position of Northern International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Northern International.
Diversification Opportunities for Investec Emerging and Northern International
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Investec and NORTHERN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Northern International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern International and Investec Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Investec Emerging Markets are associated (or correlated) with Northern International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern International has no effect on the direction of Investec Emerging i.e., Investec Emerging and Northern International go up and down completely randomly.
Pair Corralation between Investec Emerging and Northern International
Assuming the 90 days horizon Investec Emerging Markets is expected to under-perform the Northern International. In addition to that, Investec Emerging is 1.11 times more volatile than Northern International Equity. It trades about -0.18 of its total potential returns per unit of risk. Northern International Equity is currently generating about -0.14 per unit of volatility. If you would invest 1,067 in Northern International Equity on August 29, 2024 and sell it today you would lose (25.00) from holding Northern International Equity or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Investec Emerging Markets vs. Northern International Equity
Performance |
| Timeline |
| Investec Emerging Markets |
| Northern International |
Investec Emerging and Northern International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Northern International
The main advantage of trading using opposite Investec Emerging and Northern International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging position performs unexpectedly, Northern International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Northern International will offset losses from the drop in Northern International's long position.| Investec Emerging vs. Ab High Income | Investec Emerging vs. Vanguard High Yield Tax Exempt | Investec Emerging vs. Victory High Income | Investec Emerging vs. Calvert High Yield |
| Northern International vs. Versatile Bond Portfolio | Northern International vs. Barings Active Short | Northern International vs. Angel Oak Ultrashort | Northern International vs. Sterling Capital Short |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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